Obama’s big bang: Sizing up risk

It’s going to big, bold and fast. But keeping the stimulus package – or packages – from becoming a runaway train will take some restraint on the part of lawmakers.

NEW YORK (CNNMoney.com) — It is widely considered to be a foregone conclusion. The government will commit a breathtaking amount of money — as much as $1 trillion may be required, some say — on an economic recovery package over at least the next two years.

Economists from across the philosophical spectrum have advised President-elect Obama to act boldly to prosecute a war against the economic and financial crises, the speed and depth of which have shocked most experts.

Lawmakers and Obama are already starting to publicly discuss the broad outlines of elements they want in a stimulus package.

But to win a war, it’s a good idea to map out or at least have a sense of the endgame before deploying the troops. That is, lawmakers must think about establishing yardsticks, curbs and deadlines for the money.

Otherwise, there’s a risk that the historic recovery package morphs into a boondoggle that mortgages the nation’s future by adding hundreds of billions to the deficit while creating a hard-to-tame bureaucracy.

Many countries with growing economies have been shrinking the size of their governments, said Harvard economist and stimulus advocate Kenneth Rogoff on CNN’s “Your Money. “And here, we’re blowing it up. That’s a concern over the longer term.”

But in the short-term, Rogoff doesn’t see an alternative if lawmakers are to prevent what he characterizes as the worst recession since World War II from becoming even worse. “We could just see something really incredible if they don’t act coherently,” he said.

Red flags that would worry some

The breadth and time limit of stimulus efforts are two areas that pose potential concerns for stimulus supporters and opponents alike. more